5 - SRM UNIT Money

Unit 4 Risk Management: Tools & Overview, Capital, Cash Outflow, Outside Financing

Learning Targets:

The student maintains, monitors, controls, and plans the use of financial resources to ensure

business stability

1. Tools & Overview

• Describethe fundamental financial concepts involved in the management of corporate finances, including
  • the nature of depreciation
  • cash flows
• Analyze the need of efficient capital markets in corporate finance

2. Capital

• explorecapital budgeting process
• perform calculationsnecessary for capital budget decisions making including:
  • calculatingthe initial investment associated with the proposed capital expenditure
  • determiningthe operating cash inflows
  • determining terminal cash flow
• conductcash-flow analysis to select an acceptable capital expenditure including:
  • interpretingthe nature of relevant cash flow-analysis
  • explainingthe nature of the payback period
  • calcualtingthe payback period
  • calculatingthe net present value
  • explainingthe relationship between the internal rate of return and the net present value
  • calculatingthe net present value
  • calculating the internal rate of return
• explaingthe role of financial planning in corporate finance, including
  • the financial planning process
  • short term operating strategic planning
  • long term operating trategic planning
• conductcash planning including:
  • explainingthe use of cash budgets
  • copingwith uncertainty in cash budgets
  • preparinga cash budget
  • evaluating a cash budget

3. Cash Outflow

• conductprofit planning, including
  • formulatingthe use or pro-forma statments in profit planning
  • developinga pro-forma income statement
  • preparing a pro-forma balance sheet
• define and describethe nature of short-term financial management
• explaingthe role of valuation in making appropriate financial decisions for a company including:
  • discussingthe role of project valuation in capital allocation decisions
  • comparingmethods of valuing flexibility
  • discussing the valuation impliactions in buisness finance

4. Outside Financing

• usecapital market securities to secure financing for a company, including but not limited to:
  • analyzingmethods to determine the best financial option necessary for a company
  • analyzingthe nautre of corporate bonds
  • analyzingand determining the cost of long-term debt
  • describingthe issuance of stock from a corporation
  • comparingand contrasting preferred stock and common stock
  • calculating the cost of preferred stock and common stocks
• explainingthe role of dividends in corporate finance, including
  • forms of dividends and
  • reinvestment plans
• describethe effect of a firm's dividend decisions on its external financing requirements
• illustratethe residual theory of dividends
• describethe impact of dividends on the value of the firm
• explainthe nature of a dividend policy
• explainthe factors to consider when deciding on the form of a dividend distribution
• analyzeownership change transactions, including
  • comparingmergers and acquisitions
  • explainingthe nature of hostile takeovers
  • discussingissues that arise from mergers and acquisitions
  • explainingmethods for evaluating potential merger/acquisition targets
  • analyzing the nature of restructuring